Ericsson year-on-year sales flat for second quarter of 2013

19 Jul 2013 10:19 AM

Despite strong sales growth in the North American market, Ericsson reports weaker than expected results after one off charges and a decline in sales in North East Asia

Ericsson reported flat year-on-year sales of £5.5bn for the second quarter of 2013. However, sales were 6% up on the previous quarter. Net income was up 26% year- -on-year to £149 million, while operating margins rose from 32% to 32.4% over the same period.

However, operating income was down 24%, below analyst expectations at £249 million after being impacted by a one-off £90 million charge and the cost of exiting from the telecom and power cable operations.

North America was Ericsson’s best region with £1.5bn of sales, up 18% year on year, although Hans Vestberg, president and CEO, noted that this was due to ‘two large mobile broadband coverage projects have peaked in first half 2013’, suggesting that the second half of the year may be less fruitful.

He added: ‘North East Asia had another challenging quarter following continued structural decline in GSM investments in China, FX in Japan and lower business activity in South Korea due to spectrum delays.

‘The business mix, with a higher share of coverage projects than capacity projects, started to shift slightly towards more capacity during the quarter,’ noted Vestberg.

He continued: ‘We implemented our strategy to capture new market share in the network modernisation projects in Europe starting in 2010, despite their initial lower margins. Now that these projects gradually come to an end, we can conclude that we have been successful in gaining market share and regained leadership in Europe.

‘It is also encouraging to see that we are now starting to engage in new business, based on this footprint, regarding capacity and LTE projects in Europe.

‘We continue to strengthen our leading position in 4G/LTE. The vendor selection processes for 4G/LTE in Russia and China continue and to date we have been awarded contracts by two large operators in Russia.

He concluded: ‘While the macroeconomic situation in Europe remains challenging and the political uncertainty in parts of Region Middle East, such as Egypt, increases, the long-term fundamentals in the industry remain attractive and we are well positioned to continue to support our customers in a transforming ICT market.’